Subscribe to the ADM Agriculture YouTube channel for the latest grain, seed & fertiliser market updates and much more!
This week: the UK haulage crisis and the current grain markets.
Thursday 7 October 2021
Wheat
- Wheat markets have continued to strengthen following Russia’s declaration that it will introduce export curbs from mid-February.
- Continued buying activity from key importing nations should continue to add support to the global grain complex.
- The Russian government plans to impose wheat export limits as part of a general grain export quota programme from mid-February, basing the figure on current exports and domestic demand.
- Russian farmers had harvested 108.4mln t of grain before drying and cleaning, including 75.1mln t of wheat, as of 5 Oct. The country’s ministry expects grain production will reach 127mln t.
- The Ukrainian government has cut its 2021 grain crop forecast to 80.25mln t, including 31.5mln t of wheat, but raised its export outlook to 61.45mln t, which could include 24.5mln t of wheat.
- US gulf exports have started to accelerate as export hubs again become operational after Hurricane Ida, although it is expected to be some time before they run at full capacity.
- Egypt’s state buyer GASC purchased 240,000t of wheat (75% Russian, 25% Romanian) wheat in its latest tender for Nov 11-20 shipment, but passed on offers for Nov 21-30 shipment.
- EU soft wheat exports had reached 8.07mln t as of 3 October, up from 5.56mln t this time last year, although data for France and Italy is still being delayed.
- The EU Commission now puts the EU soft wheat harvest at 131mln t, a rise of almost 4mln t since the end of August. Exports are forecast at 30mln with closing inventories set to rise year on year.
- UK prices have risen, although not at as strongly as other exchanges, due to a slight increase in the value of sterling. Milling imports are now an attractive option for UK flour millers as domestic premiums have risen.
- UK farmers are now concentrating on fieldwork in preparation for the 2022 harvest. The seasonal slowdown in ex-farm sales should keep the market underpinned. Harvest 2022 prices remain attractive for growers, despite the huge increase in fertiliser prices.
Malting Barley
- World malting barley markets have risen again over the last few days.
- The rise in prices is supported by the industry, which is actively trying to buy but finding few sellers.
- Prices are now reaching levels not seen for many years, but are also supported by firm feed prices and expensive freight.
- UK buyers are now well covered for the rest of the year but there are also shorts in the market.
- Those growers needing October/December movement should think about marketing their grain sooner rather than later.
- It is thought that there is a much higher percentage of unsold malting barley on farm than normal.
- Crop 2022 buyback contracts are also very attractive. Please contact your local ADM Agriculture farm trader for details.
Feed Barley
- Barley prices continue their upward trajectory for another week, led higher by further gains in the wheat market and a continuing slow pace of farm selling.
- Tenders from Tunisia, Jordan and Turkey are keeping a floor under Black Sea FOB prices, which is still the cheapest origin for Q4, and the ongoing elevation issues in Australia are keeping demand in the Northern Hemisphere.
- Destination demand for UK barley is limited and the tricky freight market is preventing any firm markets from being reported. Barley in Northern Europe is in fairly short supply and prices still look attractive vs other products.
- There are still spot shorts in the UK domestic market and, with a lack of supply/firming futures, sellers are extremely defensive which is causing the discount to wheat to narrow further.
Rapeseed
- Outside markets have tried to recover some of last week’s losses. Energy markets continued firm at the start of the week before falling back in Wednesday’s session.
- After trading lower at the start of the week, soybean prices touched their lowest level since March but bounced from $12.30 to close at $12.50. Traders were said to be unwinding short bean/long grains spreads, which offered some support, but the biggest driver had to be the rally in veg oils.
- The US soybean harvest is progressing quickly, reported to be 34% complete nationally, just below last year but ahead of the 26% average.
- Soybean yields continue to improve. Analyst IHS Markit increased its estimates to 51.1 bushels per acre (from 50.6 bpa) and it seems others are looking to do a similar increase. Crop conditions are unchanged at 58% good/excellent.
- In South America, the Brazilian real fell to five-month lows, but farmer selling remains very limited. The weather calls for scattered showers across central Brazil and southern Argentina, whilst heavier rain is in the forecast for the northern regions.
- China has remain absent from the market due to Golden Week holiday, which has added some price pressure. The US also intends to outline plans for further phase one trade commitments, with US trade representative Katharine Tai suggesting the renewal of tariffs looks likely.
- Crude oil prices rallied $2 this week to seven-year highs as OPEC and Russia continue to only gradually increase production.
- Malaysian palm oil futures rallied 3.5% to make a new historic highs. It seems like the shortage of available labour is now starting to make a big impact on palm oil production, with growing imports into India throughout September. On Monday (11th), the Malaysian palm oil board will release its latest update.
- Canadian canola prices rallied to trade over $900, but farmer selling has backed off now harvest is largely complete. Yields hit by drought were understandably lower than last season whilst oils were estimated close to 3% lower at an average of 41.5% vs 44.3% last year.
- Matif rapeseed yet again surprised by rallying to record highs again this week, gaining over €100/t in a month. Higher energy costs and lagging veg oil prices pressured crush markets and, with seed prices at highs, there seems to be little appetite to own seed at these levels.
- Strategie Grains estimates EU rapeseed plantings at 5.6mln hectares, up 7% on last year, although ending stocks this season are put at a record low of 900,000t.
Oats
- Prices have remained fairly flat this week in the UK due to the most part of a rise in £/€ rate. Domestic feed oat prices have continued to follow the other feed grains higher. However, with recent trades at £40/t discount to feed barley, feed oats look very cheap.
- Issues with shipping freight continue to push export prices higher, with buyers struggling to get supplies. Closer to home consumers are feeling the pressure from a lack of deliveries and are also having to pay higher prices in order to guarantee supplies. Milling oats remain around £160-£170/t ex-farm, subject to location, with feed oats around a £20/t discount. However, it feels as if prices could go higher.
- Our winter oat sampling averages remain around 50kg/hl with springs at 48kg/hl.
- Milling oats export values remain unreported, but levels around £200Fob could be achievable.
- Oat markets remain well supported.
Seed
- Winter seed availability is very limited across the board. Please get in touch with your farm trader for a full availability update as soon as possible to avoid disappointment.
- Haulage is still the main hold up with getting seed on to farm. We urge growers to be patient as we do our best to get deliveries onto farm in a timely fashion.
- Don’t forget ADM Agriculture can cover all of your grass seed, stewardship and cover crop needs. Please see page 25 on our 2021/22 seed varieties guide for more information.
Fertiliser
- Global urea sales achieved $800/t FOB Egypt this week. This is the highest level in over a decade. New records could be seen before Christmas.
- Further gains are expected in Europe as news breaks of further urea and AN plants reducing their capacity or seeking government help due to soaring gas prices.
- The European market is behind the traditional buying curve for this time of year following the higher new-season reset prices and limited commitment to early buying.
- Expectations of a large wheat areas still remain in the UK and on the Continent, with relatively positive gross margins at present despite high fertiliser prices.
- MOP has traded higher into South America giving room for potential rises of around £40/t from today’s levels.
- Phosphate levels could remain supported whilst Chinese export restrictions remain in force. However, EuroChem has regulatory approval to mine 350mln t of reserves of TSP and MAP, which will provide 1mln t per annum to the global market from 2023.
| £/€ | £/$ | €/$ |
|---|---|---|
| 1.175 | 1.359 | 1.156 |
| Feed Barley £ | Wheat £ | Beans £ | Oilseed Rape £ | |
|---|---|---|---|---|
| Nov21 | 184-194 | 195-205 | 240-245 | 553-558 |
NB: Prices quoted are indicative only at the time of going to press and subject to location and quality.
“Although ADM Agriculture take steps to ensure the validity of all information contained within the ADM Agriculture Market Report, it makes no warranty as to the accuracy or completeness of such information. ADM Agriculture will have no liability or responsibility for the information or any action or failure to act based upon such information.”
ADM Agriculture cannot accept liability arising from errors or omissions in this publication.
ADM Agriculture trade under AIC contracts which incorporate the arbitration clause.
Terms and Conditions of Purchase.
On every occasion, without exception, grain and pulses will be bought by incorporating by reference the terms & conditions of the AIC No.1 Grain and Peas or Beans contract applicable on the date of the transaction. Also, we will always, and without exception, buy oilseed rape and linseed by incorporating by reference the terms & conditions of the respective terms of the FOSFA 26A and the FOSFA 9A contracts applicable on the date of the transaction. It is a condition of all such transactions that the seller is deemed to know, accept and understand the terms and conditions of each of the above contracts.